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Boots at odds with suppliers over cost cutting

ALLIANCE BOOTS is locked in a bitter battle with its suppliers over attempts to extract cost savings from its supply chain after the £6.7 billion merger in July 2006 of Boots and Alliance Unichem.

The specialist health and beauty retailer that owns Boots the chemist gave its suppliers a deadline of February 2 to respond to the proposed cuts in wholesale prices of over-the-counter medicines and toiletries.

It is understood that the company wanted to reduce some prices by as much as 8% to 15%.

City sources said that about 30 of the group's 80 or so main suppliers had still not agreed to the changes, but the company was hopeful it could strike a deal with the majority of the contract rebels.

However, one source familiar with the talks admitted: "Some of the suppliers have been really intransigent. In a few cases talks with Boots have got very heated."